• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Malaysia is a middle-income country in South East Asia with a population of 23 million people.

Extracts from this document...


Malaysia is a middle-income country in South East Asia with a population of 23 million people. Malaysia was formed in 1963 through a merging of the former British colonies of Malaya and Singapore, including the east Malaysian states on the northern coast of Borneo. However Singapore seceded from Malaysia in 1965. Below: A Map showing the country of Malaysia, Situated in South East Asia. Malaysia is currently an export-oriented manufacturing economy and has developed rapidly from being an agriculture-based economy only 25 years ago, to one now dominated by manufacturing. This is shown by manufacturing growing from 13.9% of GDP in 1970 to 46% in 2002, while agriculture and mining, which together had accounted for 42.7% of GDP in 1970, dropped to 12% in 2002. Manufactures now account for about 82 per cent of Malaysian exports, of which most are Electronic goods. The composition of the Malaysian economy is: Agriculture and Mining: 12% Manufacturing: 46% Services: 42% Below: A Table showing key Economic Indicators for Malaysia from 1998 - 2003 1998 1999 2000 2001 2002 2003 GDP (US$bn) 72.2 79.1 90.2 88 94.9 101 GDP (per capita US$) 3254 3485 3837 3664 3868 4042 Unemployment % 3.9 3.4 3.1 3.7 3.5 4.0 Inflation (% Change) 5.3 4 1.6 1.4 1.8 1.7 Globalisation refers to the increasing integration of economies and markets leading to the emergence of a global market place. The process of globalisation has had a big impact on the Malaysian economy and culture. Malaysia is a country embracing globalisation and adopting strategies to further enhance the positive effects of globalisation upon their economy. ...read more.


However even in times of need like during the 1997 Asian recession, Malaysia refused to accept IMF loans, instead Malaysia implemented its own strategic changes to cope with the hardships. Even though there was international criticism of Malaysia not accepting loans its has proven in Malaysia's favour as Malaysia has since had high levels of growth and developed infrastructure in the financial sector to minimize or prevent any future recessions of the same magnitude as in 1997, without the need to repay World Bank loans and conform to their strict restructuring criteria. Malaysia has also been adversely affected by globalisation in the past. As part of Malaysian reforms aiming to implement the National Development Policy, deregulation of the financial sector, privatisation of state-owned enterprises and lowering of tariff and protection barriers occurred. However, once markets were opened up, Malaysia soon found that along with the rewards of trade liberalisation, such as access to more markets, came with it the volatility of the financial world. In 1997 Malaysia was hard hit by a contagion in local markets. The crisis of 1997 escalated when the Thai government devalued its currency. Thailand was in a bad economic state with an unsustainable current account deficit, rising foreign debts (particularly short term) and increasing difficulties in the financial sector. The foreign and local investors withdrew their money not only from the Thai economy but also from Malaysia and Indonesia in massive amounts. The contagion spread to Korea, Hong Kong and China by October that year. In the first two quarters of 1998, Malaysia, Hong Kong and China slid into recession. ...read more.


This makes the future for Malaysia look bright. The 2020 policy in which Malaysia want to be classified as an AIE is likely to happen although unforseen circumstance may slow down this aim. A weakness in current policy in Malaysia that could slow development is the pegging of the Malaysian currency the Ringgit to 3.80/US$ this allows the Malaysian market to be undercut by other economies that have lower exchange rates. The Yuan has been also pegged to the US$ at a seemingly lower rate then the Ringgit, this allows Chinese exports to have a comparative advantage in export markets. The refloating or devaluing of the Ringgit could be beneficial to Malaysia in the future. Also the strategies adopted by the Malaysian government have been largely beneficial to the manufacturing sector. This however has left the agriculture sector of the Malaysian economy to suffer from increased competitiveness, Rice farmers in particular are now struggling to sell all of their crops and are creating surpluses which are unable to be sold. Malaysia has maintained healthy foreign exchange reserves and a relatively small external debt, which make it unlikely that Malaysia will experience a crisis similar to the one in 1997. However with Malaysia being highly dependent upon exports to Japan and the USA the current economic slowdown hurts Malaysian growth as export rates are lowered, as is FDI in Malaysia from those countries. If this slowdown is prolonged the 2020 vision may have to be postponed. However while still not classified as an AIE Malaysia is sure to become one in the future, before or after 2020, it is not certain, but rising GDP and Income Per Capita has lead to an increase in Malaysian standard of living, which is likely to continue. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Peer reviewed

    How is National Income derived? What is the GDP? What information does it give ...

    3 star(s)

    the number of cars, computers and meals served.". Per capita income is a measurement of income per person in a population and is often used to measure a country's standard of living. Measuring Per capita income has a few flaws though. It gives no indication of the distribution of income within a country, so a small wealthy class

  2. Retailing In India - A Government Policy Perspective

    Also, we find that most counter store operators do not pay income tax at all, and sometimes even evade sales tax. The non-enforcement of laws applies in other situations as well, such as in the control over the sale of counterfeit products and adherence to labor laws.

  1. The Japanese Occupation - Concept of Great East Asia Co-Prosperity Sphere

    as the subordination of their interests to Japanese military and material requirements. In French Indo-China, the independence movement was to be encouraged and the French forced out. Chiang Kai Shek with whom the Japanese were currently trying to come to terms was to be offered the occupation of Tongking as part of the price for a deal.

  2. Globalisation in Malaysia

    2008 saw GDP rise again to 5.1% mostly due to exporting oil and food at higher prices. The rate of inflation is also starting to rise, after a long period of falling inflation rates, caused by the current global slowdown (statistics.gov.my).

  1. Imports and Exports of a country.

    Given sufficient time the economy will recover and show sustainable growth. In the short term, the government has one strong weapon that helps to regulate or stimulate sluggish economy: tax cut may spur growth but it is a temporary measure.

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    As they are closer to the government who controls the Bank of England so they can lower interests rate to enable the value of the pound to fall and appreciates the Euro. Or Sony can convince the Speculators not to buy the pounds especially if interest rate is low because

  1. The Neo-Malthusian Population Trap

    These, including social institutions and resource endowment, are factors that need to be considered. The Neo-Malthusian Theory is putting too much emphasis on population growth, not taking political, social and economic institutions and resource endowment into account. Egypt and Kuwait are Countries that show that population is not the only determinant of economic development.

  2. What effects have interest rates had on economic indicators like GDP, Inflation ,Unemployment and ...

    When the pound increases against other currencies, our exports become more expensive abroad, so it will not sell as much. Also foreign goods become relatively cheaper making British products are less desirable. The opposite happens when interest rates decrease. How Interest Rates affect Economic indicators.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work